The Limousine Associations of New Jersey held another session Wednesday to update operators on tighter compliance rules for overtime and independent contractor wages and workers’ comp.
WOODBRIDGE, N.J. — As federal and state governments become more union-friendly, the definitions of workers and independent contractors have shifted, along with the rules small business people must follow in paying wages.
Chauffeured transportation operators are having to take extra pains to prove that independent contractor employees meet a lengthening list of requirements, lest those contractors be branded employees and subject to overtime wages.
In New Jersey, the consequences are becoming more costly as at least six operators so far have been ensnared by changes in wage rules and more aggressive enforcement. Most have had to pay fines and back wages levied by the New Jersey Department of Labor.
“One company after another has been getting nailed,” said Barry Lefkowitz, executive director of LANJ, last week in advance of today’s summer LANJ meeting. Lefkowitz represented the operators in negotiations this year with the NJDOL. “We’ve been fortunate that because of my credibility and relationship with the department, they allow me to handle the negotiations. We’ve been able to get the amounts down significantly.”
Lefkowitz estimates some of the operators paid about 20% of the original monetary amounts assessed.
“Whether knowingly or unknowingly, the fact is they were out of compliance,” he said. “The states are taking a very stringent approach on a lot of these issues in terms of overtime and independent contractors, and they are now taking precedent.”
To avoid more such scenarios, LANJ and industry associations nationwide have been trying to inform operators about changing labor laws and more aggressive enforcement of them. That was the focus of today’s LANJ meeting at the Hampton Inn Woodbridge at 370 US Highway Route 9 North in Woodbridge, N.J. Topic A was wage compliance, being led by attorney Don Mallo, a vice president at Extensis, a human resources consultancy in Woodbridge.
“It’s a national issue that’s growing, because agencies are talking,” Lefkowitz said of increasing cooperation among federal and state DOLs.
Complicating matters is the fact that unions have prevailed on Congress to insert language that redefines commercial vehicles and the status of drivers, thereby expanding the definitions of W-2 employees subject to overtime.
“You get insertions that no one knows about,” Lefkowitz said of the sneak provisions. “It happens with the Highway Transportation Reauthorizaiton Bill which runs thousands of pages. Organized labor stuck in sentences that redefine a commercial motor vehicle, so it screwed the limousine industry.
“We lost the overtime wage exemption because federal law overrides state law,” he said. “Whoever is more stringent, takes precedence.”
Operators could previously follow a 20-point IRS test to see if they were complying with federal wage rules, but now “we’ve gotten into the era where commissioners of Departments of Labor have taken the position of whatever is going to be best for the worker,” Lefkowitz said.
“Their requirements for being able to prove independent contractors have gotten really difficult,” he said. “They are now saying, does the person have their own business card, do they advertise on the Internet? That’s how fine they’ve gotten in terms of you having to prove someone is an I/C. No longer can you have a separate corporation set up that leases vehicles to drivers. You could do it under the IRS test, but no longer.”
UPDATE: Repeal of New Jersey limo service sales tax
LANJ is taking one step closer to an outright repeal of the onerous 7% state sales tax on INTRAstate chauffeured transportation service.
Lefkowitz will be meeting with New Jersey State Treasurer Andrew Baristoff before Labor Day to work out the formal language of a repeal which would then be put through the New Jersey State Legislature as part of fall budget legislation.
Operators are already exempt from the sales tax as it applies to limousine purchases, leases, rentals, parts, labor, and gratuities, but not on actual client runs. A New Jersey operator taking a client, for example, from Paterson to the Newark International Airport must levy the 7% tax, but if he takes that same client to JFK International, the tax does not apply because that run would be considered INTERstate transportation.
Source: Martin Romjue, LCT Magazine
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